Today the CFPB issued its long-awaited final rule regarding larger participants in the nonbank auto finance market that will allow the Bureau to supervise larger nonbank auto finance companies for the first time. The CFPB also released examination procedures that its examiners will use to ensure that auto finance companies are following the law.
Currently, the Bureau supervises auto financing at the largest banks and credit unions. Today's rule extends that supervision to any nonbank auto finance company that makes, acquires, or refinances 10,000 or more loans or leases in a year, which the Bureau estimates will cover approximately 90% of the market.
The final rule counts automobile leases toward the 10,000 threshold, but excludes motor homes, recreational vehicles, golf carts, and motor scooters (e.g., Vespas) from the count. The final rule further clarifies that purchases or acquisitions made by special purpose entities for purposes of asset-backed securitizations are also generally not counted.
In regard to the examination procedures, the Bureau's press release indicated that its exams will focus on UDAAP issues associated with marketing and disclosures, FCRA issues around accurate furnishing of information to credit bureaus, FDCPA and UDAAP issues associated with collection of debt, and fair lending concerns regarding underwriting and pricing practices and methodologies.
Today's rule will take effect 60 days after publication in the Federal Register. A copy of the rule published today can be found here, and the examination procedures can be found here.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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